Is a Recession Coming?

Uh-Oh…

On July 27, 2022, the fed raised interest rates again, bringing rates to between 2.25% to 2.5%.

Does this mean a recession is coming or are we already in one? Who knows? Every financial pundit has a different opinion. Either way, both inflation and recession create nail-biting fortuity.

What Does a Recession Mean for Me?

If you hold a student loan or home loan, the recession news is less positive than it is for those with enough money in a savings account to keep afloat or who are living off a high-yield savings account.

But whether higher interest rates work for or against you; whether we’re in a recession or not, there are some things you can do to ride out a recession with your financial boat intact.

Financial Advice for Riding Out an Economic Downturn

Take stock of your current financial situation.  Winnie Sun, Managing Partner, Sun Group Wealth Partners  advises to take a look at your retirement assets, savings, and checking accounts to see where your assets lie.

Audit your budget to see where you’re spending and where you’re earning. This will help you determine if you need a budget or not.

Start with the bare bones to get a baseline. First the priorities. What are you spending on housing, food, utilities and medical expenses? After that,  look at what you’re spending on car payments and nice-to-have’s like streaming services.

Consider whatever is left is discretionary income.

Be a Budget Planner. Make budgeting a family affair so everyone agrees on your financial management plan. It’s good for your marriage and provides instructive money role modeling for your kids.

 

Tip: Use a membership card that offers a percentage-off gas deal. Some rewards programs offer cash-back incentives.

Diversify your investments. Stocks tend to fall during a recession, which can be a good thing or a bad thing.

If you prefer to stay in the stock market, buy from companies you know will come out strong as the recession wanes.

If the stock market’s fluctuations make you nervous, consider buying bonds like government-guaranteed savings bonds or investing in foreign securities and precious metals.

If you have a recession-proof job, take this time to pour as much into your savings as possible.

You can also invest in your family’s financial future with a level term life insurance policy. Term rates are locked in without the fluctuations interest-earning policies suffer. It’s much less expensive and payouts are completely tax-free.

Pay down or pay off credit card debt. And throw away new credit card offers—unless you can transfer current credit card debt to a card with a lower interest rate if you can find one.

Avoid new loans and consider refinancing any variable rate loans to fixed-rate loans. Look into doing the same for your student loans, too.

Invest in yourself. Consider ways you can generate outside income with a part-time job or an online business.

Reach out for help if you need to. Call companies and utilities to whom you owe money and explain your situation. A lot of times, they’ll give you a break.

Look for ways to have fun. Even in a recession, there are still simple ways to have fun and grow stronger bonds with your family. Play the games or do the puzzles you never had time for, go on a day trip to a free museum, or have a picnic. Ask your kids for other ideas.

No doubt economic downturns are white-knuckle events. But as you ride out the storm, take time to breathe and appreciate the little moments that make you smile. And stop doomsday scrolling. It’s going to be fine. This isn’t our first rodeo.

Is Life Insurance Taxable?

Do I Have to Pay Taxes on My Life insurance Death Benefit?

Life insurance is a lifesaver for loved ones you leave behind. But there can be some scary surprises if you aren’t familiar with the tax codes attached to your policy.

If your life insurance policy is simple, your payout is simple and tax-free. A death benefit is not considered income.

However, if your policy is set up to gain interest, any interest you earn on your policy is considered income and therefore is taxable.

Simple Term Policies: No Tax

term life insurance policy,  is non-taxable. You buy the policy for say $50,000 and your loved ones will receive $50,000 tax-free.

Keep in mind that you must appoint a beneficiary. Not having one may delay your benefit from getting to your loved ones as it makes its way through probate court.

Also, consider leaving your benefit to more than one beneficiary to ensure that if one dies, the surviving one will receive the payout, not the IRS.

If you want your child to be your beneficiary, set up a trust. This ensures that inheritance is used in a responsible way.

Permanent Policies: Probably Taxed

The federal government and some state governments handle permanent life insurance differently since this type of policy can accrue interest. Beneficiaries may have to pay taxes on that gained interest.

However, the interest is taxable only if it exceeds the amount you paid in premiums. And it’s not retroactive. Your loved ones only pay on the interest earned after your death.

Now if you borrowed against your policy for more than you’ve paid in premiums and the interest it earned, you must pay what you owe before you die or your loved ones will pay taxes on the benefit. They’re also considered taxable income.

Useful Tax Strategies

Strategy #1: Transfer Your Life Insurance Policy

Transferring your policy gets you off the hook for taxes as well as premium payments. And while the person to whom you transfer is responsible for the payments and taxes, you can set aside a part of the benefit as a gift to help them pay those expenses. A gift is tax-free.

Transfers are irrevocable, so choose your transferee carefully. You can transfer your policy to a trust, which is especially helpful if your child is your beneficiary.

Now, the IRS does have some caveats regarding transfers.

And if you sell your policy, while this also frees you from paying your monthly premiums, you are on the hook for any cash or profits you received above the amount you paid in premiums.

Strategy #2: Tie Your Policy to an Estate

This is a great strategy if you make less than $12 million as an individual or $24 million as a couple. That’s the current federal threshold. If you make more than that, the estate is taxable. If you earn less than the threshold, the estate is tax-free. But no matter what side of the threshold you’re on, you do have to report the payout to the IRS.

Is your brain spinning yet? This is a lot of information—much of it beyond the scope of one humble post. Taxes, like people, can be complicated.

Make sure you talk to an attorney, tax professional, or accountant before making any tax-related decisions and putting them in writing. Your loved ones will thank you

Is Life Insurance Affordable?

Is Life Insurance
Affordable?

Is Life Insurance Affordable?

Many variables determine the premium you pay, which means there are affordable options for different types of people at a variety of price points.

But if you have dependents, it’s crucial you have life insurance to provide for your loved ones.

As you go about shopping around for a policy, here are some factors to keep in mind that can affect your premium rate.

Factor #1: The Type of Life Insurance You Choose

Some life insurance policies cost more because they provide more features.

Permanent policies provide coverage for life and some, like whole life insurance, can earn extra dividends you can put toward retirement, college tuition, or reinvest.

Term life policies provide coverage for a set amount of time like 10 years, 20 years, or 30 years. They’re less expensive than permanent policies and can be converted to a permanent policy later.

Factor #2: Your Age and Gender

Obviously, older people pose a bigger risk to insurance companies than younger people, which means they pay more. The younger you are when you buy a policy, the less expensive it is.

And gender is a factor because data shows that males tend to die younger and work riskier jobs.

Factor #3: Your Health & Hobbies

Your health has a profound impact on your ability to obtain a policy and how much you’ll pay for it. Insurance providers will look at your habits and you and your immediate family’s medical histories to get a clearer picture of your health profile.

Although you may not be able to do much about your medical history, you can do something about life-threatening habits. If you smoke or drink excessively, your policy will cost more.

What you may not know is that your hobby may also affect your eligibility and your premium—especially hobbies that involve diving, flying, and climbing.

Factor #4: Your Income

It stands to reason that the more you make, the more insurance you can afford. However, what you spend your money on affects how much money you have to spend on it.

On average, people with families tend to earn higher incomes, but have more expenses. They’re also the ones who may benefit from life insurance the most. Term life insurance  is the most affordable comprehensive option available.

That is not to say single people can bypass life insurance altogether. You don’t want to saddle your loved ones with burial expenses or outstanding debt.

Factor #5: Your Occupation

It seems unfair to penalize those who make our lives safer and easier, but life insurance providers consider dangerous jobs like firefighters, police officers, construction workers, and pilots as high risk.

If you think your occupation may incur higher premiums, an insurance agent will be able to steer you toward an affordable life policy.

Factor #6: Catastrophic Events

Things like inflation, pandemics, dangerous environments, and mortality rates can affect your premium, making them higher or lower depending on what’s going on in the world. The higher the risk, the more you pay.

Factor #7: Your Financial History

Life insurance companies don’t look at your credit card history, but they do look at bankruptcies and periods of employment to assess your ability to pay your premiums.

How Can I Lower My Life Insurance Rate?

While a few of the factors above are things beyond your control, there are some things you can do to lower your premiums:

  • Lose weight
  • Quit smoking
  • Decrease your alcohol consumption
  • Schedule and attend regular medical appointments
  • Decrease engagements in risky hobbies; instead of monthly dives, go on annual dive trips
  • Buy a policy while you’re young and healthy to lock in lower rates.

How Much Life Insurance Do I Need and How Much Will It Cost?

The amount you need to adequately protect your family depends on how much you think they’ll need if they lose your income. Consider things like your mortgage, college costs, retirement, and funeral costs.

It may look like life insurance companies charge arbitrary rates, but that’s not true. They rely on scientific data to provide the best rates possible. They need coverage to protect you and their other clients every bit as you do to protect those important to you.

Life insurance is an investment that benefits everyone

Rumor Has It Life Insurance Claims Are Up

Rumor Has It Life Insurance Claims Are Up.
What Does That Mean For You?

Rumor Has It Life Insurance Claims Are Up. What Does That Mean For You?

It’s no secret that the world is a more dangerous place than it used to be. And U.S. death rates are significantly higher—especially since COVID crashed onto our shores.

We’ve all suffered losses recently. Inflation, fires, floods, rising home insurance payments, loss of loved ones. One can assume these losses translate to higher life insurers’ claims.

Two insurance companies claim they have. according to a recent Crossroads Report, Lincoln National death benefit payouts increased an eye-popping 162% in 2021, almost one billion more than it paid in 2020.

A state insurance department annual statement from One America reflects a 40% increase in claims payouts in the third quarter of 2021. Prudential and Northwestern Mutual suffered higher payout percentages in 2021 as well.

Yet all has been quiet on the news front.

“I’m shocked that this is not a bigger story,” says Will Kibler, Managing Agent at PolicyWand. “If more people are dying you would think this would be a headline somewhere.”

Kibler says that the partners they do business with aren’t reporting the same losses. “They usually don’t lose money. But I will say that in general, most insurance companies are very protective of their mortality statistics. It’s just not something you see them divulging publicly. These companies—Lincoln especially—are in the rare position of having to explain their losses.”

A Lincoln press release states that the claims the company paid out were related to “non-pandemic related morbidity” and “unusual claims adjustments.” The release does not share the number of actual claims filed.

“I think these companies’ higher morbidity numbers are the results of a culmination of things,” says Kibler. “Drug and alcohol abuse rose exponentially during the pandemic. And there was a massive decline in health care throughout the pandemic.

“The economic dislocation associated with efforts to quell the spread of the disease may have had some negative health costs,” Kibler continues. “It looks like there was a drastic rise in the number of minorities who were affected.”

Whatever the reasons for the rise in payouts, Lincoln increased its sales by 42% and raised its premiums by 4%.

Does this mean those of us who want to buy life insurance face higher premiums? “It’s hard to say,” Kibler says. “There’s a lot of competition in the life insurance market. I think inflation will take a toll on premiums more than morbidity will.”

So, what can consumers do to keep from spending a fortune on life insurance in light of rising costs? Kibler advises against wasting time trying to find the right company with the right policy on your own. “Find a place that does the shopping for you. One that has access to a large chunk of the market and helps you find the best price.

“Rates for insurance do not vary based on where you receive your quote from,” continues Kibler. “But there are a few agencies that make it easier for the consumer to compare life insurance rates online and don’t require any contact information to compare quotes. There are also other options from agencies that gather information up front but also provide the ability to compare the same quotes online.”

Life Insurance for Daredevils with a Dangerous Hobby

Life Insurance
for Daredevils with a Dangerous Hobby

Life Insurance for Daredevils with a Dangerous Hobby

Jumping, flying, and diving are thrilling ways to get your danger on. But when it comes to protecting your family from financial ruin should your death-defying prove deadly, choosing the best life insurance to get can be an expensive game.

In addition to variables such as health and age, insurance companies consider dangerous hobbies when evaluating a life insurance application. Therefore, dangerous hobbies invite higher life insurance prices than your life insurance policy quote.

Some hobbies are more dangerous than others. Activities insurance companies do not deem risky enough to warrant a higher premium or denial include:

  • Cycling – including mountain biking
  • Skateboarding or snowboarding
  • Hiking
  • Skiing

No matter what your hobby, life insurance is critical to protect your family if you’re no longer around to provide for them—especially if you’re a thrill-seeker.

What Life Insurance Companies Consider a Dangerous Hobby

  • Flying activities: piloting a private plane or helicopter, hot air ballooning or hang gliding
  • Jumping activities: kydiving, parachuting, and bungee jumping
  • Motorsports and racing (including boat racing)
  • Motorcycle riding
  • Scuba diving
  • Surfing
  • Luging (riding a board down paved or iced surfaces)
  • Frequent adventure travel
  • Triathlon competition (raises BMI and cholesterol)
  • Mixed martial arts and boxing
  • Free running (jumping, flipping or spinning off objects while you run)
  • White water rafting

Hobbies for which a life insurance company will deny coverage include:

  • Deep sea diving or cave diving
  • Base jumping (diving off cliffs)
  • Skydiving
  • Ice or rock climbing

It’s a lengthy list. But don’t lose heart. There’s more than one way to insure a daredevil.

Life Insurance Policy Plans for Risk Takers

Term life insurance is the least expensive form of life insurance. And some companies that approve a term policy may only charge a flat extra for the first years of your policy. For instance, if you purchase a 30-year term policy you may only have to pay the flat extra for the first five years and enjoy the lower base premium for the remaining 25 years.

While one company may deny coverage for your hobby, another may provide it. It’s all about the variables surrounding probability risk.

Variables include:

  • How often you indulge in your hobby (one annual dive trip is less risky than going out every weekend)
  • The licenses or certifications you have
  • The years of experience you have

Lying Is a Bigger Risk to Life Insurance Coverage than Your Actual Hobby

Having read all this, you may be tempted to lie. But don’t. Life insurance underwriters are intensely thorough. If there’s an accident history recorded anywhere, they will find it. And your hobby will cost more than any premium you pay to cover it.

Do You Need Life Insurance If You’re Single?

Do You Need Life Insurance
If You’re Single?

Do You Need Life Insurance If You’re Single?

We’re living through some tough times. Climate change, social strife, financial uncertainty. Perhaps you’re so busy just getting through life you can’t fathom a future past next week. Or maybe you have been considering your future and life insurance is part of those musings.

But do you really need life insurance as a single person? It depends. You need it if you have people who depend on you financially or think you will in the future. A life insurance policy gives them financial comfort should they lose you.

A couple of tips if you are providing financial support for your family and shopping for term life insurance quotes online:

Be mindful of how you answer the questions associated with the online life insurance calculator. Treat the children you provide for as if they were your own and treat elderly family members under your care as beneficiaries. You can name more than one beneficiary on your policy.

For What Other Reasons Do I Need Life Insurance?

  1. Life insurance is a reasonable solution for single people carrying debt either alone or with another. Should you die before it’s paid off, your co-signer will have to pay all of it.Student debt is the biggest culprit, especially if you took out a private loan. It’s a bit less dire if you opted for a federal student loan because they’re discharged upon the debtor’s death.

    Other types of debts to consider with or without a co-signer:

    • a mortgage
    • a car loan
    • credit cards
    • business loans. Many banks require life insurance before they approve a business loan. And they require you to name the lender as your insurance beneficiary. Even if your bank waives this requirement, a life insurance policy payout buys time for your partner to figure out next steps in the event you die before the business closes and helps pay any accrued business debts.
  2. Your health. Are you healthy and plan to stay that way? Are there hereditary health conditions that run in your family that may crop up in your own life later?If you anticipate health problems as you age, life insurance may make sense. Term life insurance policies can be converted to a permanent policy without having to submit to a medical exam that can prevent you from qualifying for whole life or other permanent policies down the line.
  3. Burial expenses. Do you want to avoid having your family foot the bill for your funeral?Funerals currently hover around $7,000. The Insurance you receive from your job may cover these expenses. However, if there are medical costs involved, you may want extra insurance to cover those costs. Your family wants to remember you. Not your debt.
  4. Legacy. Perhaps you want to leave a bit of money to your favorite charity or set up a scholarship fund in your name. You can assign that nonprofit as a beneficiary. (Remember, you can assign more than one beneficiary to a single policy.)

So, What Type of Life Insurance Do I Need?

A term life policy is the best option if you’re single. It’s inexpensive and you decide for how long you want coverage. If you want to convert it to a permanent policy later you can do so with no medical exam and have the opportunity to invest part of your premium to accrue cash value. This is particularly useful if you anticipate future health challenges.

Permanent Insurance provides life coverage and accrues cash value. You can use permanent life insurance as an investment and use the cash value for things like home purchases, college expenses or to fund your retirement.

If you’re healthy, financially independent, and debt-free, you may not need life insurance while you’re single. A life insurance quote for the best term insurance rates from an online calculator is free. It can’t hurt.

How AI Is Disrupting Life Insurance Industry

How AI Is Disrupting the Insurance Industry

How AI Is Disrupting the Insurance Industry

There’s a reason life insurance underwriters, agents, and customer service reps are venturing out from their statistics-laden, fluorescent-bathed hovels to cheer their industry’s latest disrupter, algorithmic underwriting.

Artificial Intelligence algorithms have transformed traditional error-prone processes into an efficient, streamlined experience for both them and their customers.

How AI Improves the Insurance Life Cycle

AI machine learning, also called accelerated or automated underwriting, allows insurance companies to collect the kind of data necessary to provide predictive analysis about mortality and financial risks through “insurtech” software that streamlines the insurance process from quote to claim. This helps insurers make more granular decisions about the risk you pose and the premium you will pay.

The remarkable thing about machine learning is that the technology continues to refine the data it’s collecting in real time. The more data collected, the smarter the system and the more accurate the decision-making becomes.

What’s even cooler is that a behavioral intelligence component uses “digital body language” such as keyboard hesitation and backspacing to determine policy pricing and protect against fraud to weed out the application liars from the truth-tellers.

And it helps identify complex risk issues using third-party data, like pharmacy prescription histories and credit agencies, electronic medical records, and the like.

How AI Benefits Insurance Providers

Insurtech technology is flexible enough to tailor to any business model and allows underwriters to work quicker and more efficiently so they can turn their attention to strategy and value-added products.

To illustrate, insurance companies currently depend on just a few questions like age, gender, and smoking and drinking habits to rank people in categories standard, standard-plus, preferred, and preferred plus, which determine premiums. AI can drill down a bit deeper on the front end to provide more tailored and accurate predictions about mortality and lapse probability.

Behavior technology detects fraud by issuing red flags based online behavior. Those alerts send the applicant to a live agent who can further vet them over the phone and in some cases send them for a medical exam before granting the policy.

The system also scales for both its intuitive data library and revenue growth generated outpacing the costs of doing business. This enables agents to provide prospects with quicker answers and reduces human errors.

How AI Affects Life Insurance Policyholders

Chatbots already create a more streamlined quote process, taking care of simple data collection so agents can have a more substantive conversation with prospects later. Insurtech enables them to offer life insurance products more tailored to your individual needs rather than the current one-size-fits-all options.

Insurtech technology also works on the back end, providing family members with a quicker insurance claims process to get the financial support they need to them quicker.

And it saves everyone money by reducing rising insurance costs due to fraud, which increases trust between policyholder and provider.

Because in the end, the better the data, the better the decision-making.

Don’t Let Rising Gas Prices Drag You Down

Don’t Let Rising Gas Prices Drag You Down

Don’t Let Rising Gas Prices Drag You Down. How to Budget to Beat the Economic Blues.

Mark lived through the high inflation and gas crisis back in the 1970s and felt lucky to have stayed in his house, put food on the table and send his kids to college.

During his prime earning years, he maintained that life was short. You do what you can to get by and enjoy as much of it as you can while you do it. He didn’t really think about tomorrow. He was too focused on getting through his day with as much joy as possible.

Now he’s living with his kids.

According to a MarketWatch report, 56% of Americans live paycheck to paycheck, including those making six figures. Gas prices currently hover around $5 per gallon and inflation recently rose to 8%.

Scary, right? Now is as good a time as any to learn how to create a budget and stick to it—no matter what.

If you balk at living with a budget, think about living out your golden years surrounded by the noise, sticky surfaces, and general stinkiness your grandkids will create every single day of those years. Like Mark does.

How to Set a Budget

Budgets allow you to see in black and white where your money is going and helps you steer your financial ship to keep it away from the rocks.

Here are a couple of steps to help you build your ark:

  1. Set your budget at the beginning of each month.
    Budget using the income you will actually receive, not what you’re hoping to receive.
    Make budgeting a family affair that everyone invests in. Everybody benefits from a financially healthy home. No one benefits from a rogue spender.
    Know that you can always adjust your budget every couple of months. If one line item consistently comes in lower than expected, put the remainder in another category—preferably savings, but a line item for vacations or holiday gifts is also an option.
  2. Determine what’s a fixed expense and what’s a variable expense. A fixed expense like a mortgage or car payment is self-explanatory. A good tip for establishing a variable amount is to take the average you spent on the variable for three months and set that amount as the line-item figure.
  3. Place needs ahead of wants.
    Savings should always come first. Take 20% of your monthly income and put it in savings.Essentials that affect your physical and financial wellbeing should take up 50% of your monthly income. A useful list in order of priority includes:
    1. Savings (there it is again)
    2. Food
    3. Rent
    4. Utilities
    5. Credit card and loan payments
    6. Car payment
    7. Gas (Yep, car stuff is at the bottom. It’s an essential, but not at the top when you consider you can bike, use public transportation or ride share to work.)

Non-essentials like restaurants, streaming services, and that $4 Starbucks that enhance your lifestyle should take up the remaining 30%. Non-essentials are essential. If there’s something you really want, figure out how much of your essentials budget you’re willing to save and then figure out how many days or weeks it will take to buy it.

Saving tips:

  • Once you’ve paid off your credit cards, you can allocate that money to accommodate any rising costs in essentials or put it into savings.
  • Make it a goal to build up three to six months of savings to cover your expenses in case of emergencies.
  • If you have direct deposit, steer some of your paycheck directly into a savings account. And devote part of that savings to a retirement savings plan.

How to Fight Rising Gas Prices

The best thing you can do for your wallet besides dusting off your bicycle or hopping the bus to work is to make your car as efficient as possible. Some things to do to decrease the things that make it work harder:

  • Change the air filters.
  • Keep your tires road ready. Proper tire pressure can save up to thirteen cents per gallon.
  • Don’t idle. If you know you’re not going anywhere for a while, turn off your car.
  • Same for parking. Turn it off.
  • Turn off the AC and open your windows.
  • Take off your racks and carriers. They create wind resistance that strains your engine, thus requiring more gas.
  • Clean out your car to lighten the weight your car’s carrying.
  • Combine errands into one trip.
  • Slow your roll. Adhere to the speed limit and accelerate slowly.

Invest in Your Future and Protect Your Family

With the world in not only financial turmoil but suffering increasing episodes of violence, it may be time to reframe your life insurance choices. Specifically, a permanent life policy that accrues cash value as well as provides a death benefit should the worst happen.

If you currently have a term life policy, consider converting it. This will not only build wealth but will save you from having to submit to a medical exam—an extra bonus if you’re starting to notice your health changing as you get older.

Mark would have benefited from these tips if he’d had them and heeded them. But he didn’t. And now he’s trying to make the best of things while he helps his daughter-in-law change diapers and fold towels.

Best of luck, Mark.

Mortgage Protection Insurance. Life Insurance for Your Home

Mortgage Protection Insurance.
Life Insurance for Your Home.

Mortgage Protection Insurance. Life Insurance for Your Home.

If you have a family, life insurance is a must-have. If you have a home, insurance that covers your mortgage is equally important.

But how best to insure your home?

There are essentially three ways:

  • Mortgage Protection Insurance
  • Term Life Insurance
  • Private Mortgage Insurance

How does Mortgage Protection Insurance protect my home?

If you should pass away before you pay off your mortgage, Mortgage Protection Insurance (MPI) will pay your mortgage balance. This ensures your family remains in your home without worrying about how they will afford to stay there.

An MPI payout goes directly to your lender, not your beneficiary. And its payout amount correlates with your mortgage balance.

Mortgage Protection Insurance also goes by the name of Mortgage Life Insurance.

How does Term Life Insurance protect my home?

With a term life insurance policy, you determine your death benefit amount. This enables you to roll your mortgage into your term policy, which will pay off your mortgage along with addressing other financial concerns such as your lost salary, education costs, burial costs, and accrued debt you want to shield your family from having to pay.

So which one is better?

Mortgage Protection Insurance v. Term Life Insurance

The best choice between life insurance and mortgage protection insurance comes down to what makes sense to you and your family financially.

MORTGAGE PROTECTION INSURANCE TERM LIFE INSURANCE
Easier eligibility, even if you cannot qualify for any other type of life insurance. You can be turned down for a policy due to poor health or a risky hobby.
Premiums may be more expensive. Lower premiums.
Your mortgage lender is your beneficiary. You choose your beneficiary.
Death benefit payout is tied to your mortgage principal. In some cases, your payout decreases as your principal decreases. Your death benefit amount does not change.
The length of time it takes to pay off your mortgage determines how long your insurance policy lasts. You determine the length of coverage, anywhere from 5 to 30 years.
Some policies only pay out if your death is accidental. Death benefits paid upon your death, no matter what the cause.
No medical exam required. Medical exams required by some insurance companies.
If the payout does not cover the amount owed on your mortgage, your family must pay the balance. Your family is free to use the payout however they wish.
The younger and healthier you are, the less you pay in premiums. Same.

MORTGAGE PROTECTION INSURANCE

  • Easier eligibility, even if you cannot qualify for any other type of life insurance.
  • Premiums may be more expensive.
  • Your mortgage lender is your beneficiary.
  • Death benefit payout is tied to your mortgage principal. In some cases, your payout decreases as your principal decreases.
  • The length of time it takes to pay off your mortgage determines how long your insurance policy lasts.
  • Some policies only pay out if your death is accidental.
  • No medical exam required.
  • If the payout does not cover the amount owed on your mortgage, your family must pay the balance.
  • The younger and healthier you are, the less you pay in premiums.

TERM LIFE INSURANCE

  • You can be turned down for a policy due to poor health or a risky hobby.
  • Lower premiums.
  • You choose your beneficiary
  • Your death benefit amount does not change.
  • You determine the length of coverage, anywhere from 5 to 30 years.
  • Death benefits paid upon your death, no matter what the cause.
  • Medical exams required by some insurance companies.
  • Your family is free to use the payout however they wish.
  • Same.

So what is Private Mortgage Insurance, then?

PMI is insurance your lender may require you to purchase and pay as part of your mortgage payment—especially if your down payment is less than 20% of the home price. PMI protects the lender, not your family. You cannot cancel PMI since it’s rolled into your mortgage payment.

You are free to cancel both an MPI and a term life policy whenever you like.

How to qualify for Mortgage Protection Insurance

Insurance companies consider the following when making underwriting decisions that determine your eligibility and premium payment amount:

  • Your mortgage balance
  • Your age
  • Your health
  • Your credit score

 

Takeaways:

  • Mortgage Protection is exactly what it says it is. It protects your home and the family who lives in it in the event you die unexpectedly.
  • If you’re a homeowner who cannot qualify for any other type of life insurance, MPI is your best bet for protecting your family against losing their home if the unthinkable happens.
  • If you want more control over your coverage, premium, and payout, term life is your best choice.

Compare life insurance companies today

Best Life Insurance for Seniors

Best Life Insurance
for Seniors

Best Life Insurance for Seniors

As much as we don’t want to face it, life is terminal. And if you’ve reached your golden years without a life insurance policy, those premium costs are more costly than they were when you were younger. As your age climbs, so do your premiums.

But there is affordable insurance for seniors. And the healthier you are, the less you’ll have to pay.

Affordable Life Insurance Available to Seniors

  • Permanent Life Insurance
  • Term Life Insurance
  • Final Expense Insurance

Permanent Life Insurance for Seniors

As the population of senior citizens has grown during the last two decades, so has the need for flexible insurance options. Permanent insurance is one of those options.

Although more expensive, permanent policies  provide coverage with reliable death benefits for the life of the policyholder. In addition, permanent life insurance allows you to accumulate cash value that you can use to help pay your mortgage and other debts or supplement your retirement. However, if you do not pay back the amount you withdraw before you pass away your beneficiaries will not receive the full benefit.

Term Life Insurance for Seniors

If you aren’t interested in accumulating cash value and want a more straightforward policy, a term life policy fits the bill with a lump-sum payout and an unchanging premium. You control how long you want coverage and the death benefit amount.

However, unlike a permanent policy that provides coverage for life, a term life policy covers a specific period of your choosing. No more, no less.

And although some term life policies do require a medical exam, the application process for a term life policy is easier than for a permanent policy.

Burial Insurance for Seniors

Burial insurance, also known as final expense or funeral insurance, covers only your funeral and burial costs.

And although it provides a smaller death benefit, it requires no medical exam.

If you’re concerned about covering any medical care costs should you become critically ill, you may want to consider an accelerated death benefit that allows you to access your payout early. This can reduce the death benefit your family receives, but you do not have to pay it back.

Things to Consider Before Purchasing a Senior Life Insurance Policy

  • your general health. If your health is poor, you may want to purchase a no-exam policy.
  • your financial goals. If you want access to extra cash, a permanent insurance policy may be a viable choice.
  • how much coverage you think you will need to pay off debts like your mortgage, outstanding medical bills, and expected estate tax as well as how much you would like to leave behind for your family.
  • your estimated burial expenses

 

Things to Consider When Shopping Life Insurance Companies for Seniors

Before landing on your choice of company, make sure you have investigated the following conditions:

  • that they provide the kind of coverage you need
  • their maximum age for coverage
  • their online term application process
  • the company’s stability and its ability to pay benefits. You want a company with an A grade from a source like AM Best
  • the quality of their customer service. A useful resource is the NAIC.
  • any dividends you would like to accrue
  • any riders or other conditions that may reduce your death benefit

Reasonable life insurance for seniors is out there. Make sure you make the right choice. Shop senior life insurance rates today.